Zcash (ZEC) vs Monero (XMR): Which Coin is More Secure & More Private?

Privacy-oriented cryptocurrencies have been increasingly adopted as they allow users to transfer funds without revealing too much about the origin (sender) of the transaction or their personal (identification) information. Monero (XMR) and Zcash (ZEC) are among the leading privacy coins - not only in terms of market capitalization, but also as far as their adoption is concerned. In this article, we’ll carefully compare and contrast these two cryptos.

Monero (XMR) is an open-source, decentralized digital currency which was launched in April of 2014. It aims to be “a digital means of exchange with untraceable payments, unlinkable transactions, and it is resistant to blockchain analysis.” This is achieved using Monero’s proof-of-work (PoW) algorithm - which is called CryptoNight.

CryptoNight was created by the CryptoNote project - which uses ring signatures and stealth addresses. These two features make it difficult to accurately identify and track the origin (sender) of transactions. In addition, Monero’s CryptoNight consensus mechanism is considered to be very secure and allows users to maintain the highest level of privacy (when compared to other privacy coins).

Unlike many other altcoins, XMR coins are not associated with the fund holder’s public crypto address. So, if a user shares their public address with anyone, the address itself will not reveal the amount of funds that the user is holding.

Monero (XMR) Market Cap Drops From $3.7 Billion To $1 Billion

Moreover, the Monero platform does not have a block size limit and it may be (adjusted) increased according to its network requirements at a particular time. Because of this dynamic block size, the Monero blockchain can potentially process 1,000 transactions per second (TPS) - assuming that its network participants are using proper hardware and the latest client software.

In April of 2018, the market capitalization of XMR coins was $3.7 billion and has now dropped considerably to around $1 billion at the time of writing, according to CryptoCompare data. However, this is likely due to the overall decline in the market of cap of almost all major cryptoassets.

Zcash (ZEC) is another fully open-source digital currency platform that was launched in 2016, however, many in the crypto community do not think it is completely decentralized. Similar to Monero, Zcash transactions are considered highly secure and maintain user privacy.

ZCash Network Uses Fungible Tokens/Coins

The Zcash platform was developed by some members of the Zerocoin project - which is an initiative that aims to improve the anonymity of bitcoin (BTC) transactions (and is built off of the Bitcoin Core codebase). Total supply of ZEC coins has been capped at 21 million.

One of the main (proposed) use cases for ZEC was to develop a fungible cryptocurrency. These types of coins are interchangeable, meaning that ZEC coins can serve as a replacement for other crypto tokens and coins. Transactions with fungible cryptos are more difficult to track - which makes it harder to identify the sender and recipient of funds.

Both Zcash and Monero use the proof-of-work (PoW) consensus mechanism, however, there are fundamental differences between how both platforms have implemented their respective network management protocols. Transaction data for XMR coins is “mixed” with others, while transfers involving ZEC aim to eliminate traces of transaction data.

Zcash Does Not Offer Privacy By Default

The main difference between Zcash and Monero is that the former is not private by default, so as soon as a Zcash miner discovers a block, the ZEC coins associated with that block are sent to the corresponding private Zaddress. Moreover, Zcash uses fixed 2 MB block sizes with 2.5 minute intervals between consecutive blocks - which is basically equivalent to a (hypothetical) 8 MB block size for bitcoin (BTC) with 10 minute intervals between blocks.

What this means is that (theoretically), the Zcash network can handle 8x as many transactions per second than the Bitcoin blockchain - which is about 50-65 TPS.

Compared to Monero, Zcash transactions are usually less expensive. Notably, in April of 2018, the market capitalization of ZEC coins was of about $1 billion and has now dropped significantly to around $440 million

Coinbase CEO: We Don't Believe QuadrigaCX Did an Exit Scam

According to the CEO of Coinbase, the largest US-based cryptocurrency exchange, the embattled Canadian exchange QuadrigaCX could have used the death of its CEO Gerald Cotten as a way to cut its losses, after running fractional since 2017. Notably, he noted he doesn't believe it pulled an exit scam.

According to a series of tweets Brian Armstrong published, in which he emphasized this is a guess that should be taken as “pure speculation,” he revealed Coinbase has made its own internal research into the case, and initially found that QuadrigaCX had funds in cold storage being controlled manually, that were moved in early 2018.

Armstrong noted the exchange is one of the oldest in existence, as it has been running since 2013. Per his words, if they “planned an exit scam, it likely would have been timed better.” The CEO noted that QuadrigaCX suffered a “multimillion dollar bug in June 2017,” before things went wrong.

This, Armstrong added, is when movements from the exchange’s cold storage wallets started occurring.

4. Patterns of sends from cold storage suggest they tried keeping exchange afloat, and maybe attempted to trade their way out of a hole; (again just a guess here)

While the Canadian exchange could, presumably, be attempting to escape its situation the 2018 bear market, that saw the price of most cryptocurrencies drop by 85%, could have seen the liquidity of its platform dry up.

Per Armstrong, the “sequence of events suggests this was a mismanagement with later attempt to cover for it.” He added:

This implies that at least few people inside Qadriga knew that they were running fractional. If so, then it's possible that untimely death of their CEO was used as an outlet to let the company sink.

The CEO of Coinbase added that when Gerald Cotten passed away, the exchange could’ve taken some time to debate the situation, and used it to claim it no longer had access to its money. Armstrong finished by noting that while the story isn’t perfect “it does seem plausible.”

It’s worth noting that other researchers have questioned whether QuadrigaCX ever had funds in cold storage to begin with. Moreover the researcher, MyCrypto’s Taylor Monahan, found suspicious transactions from QuadrigaCX to exchanges like Poloniex, Bitfinex, and Shapeshift, suggesting the funds could’ve been liquidated.

Monahan has urged caution regarding the use of data to jump to conclusions. Armstrong has also noted that as “the case unfolds we might find out we were incorrect.”

QuadrigaCX’s Situation

As CryptoGlobe has been covering, QuadrigaCX claims to have been locked out of $145 million in cryptocurrencies stored in cold wallets after Cotten passed away. His wife, Jennifer Robertson, has filed an affidavit where she reveals the CEO single-handedly managed the exchange’s transactions through his laptop.

Since then, the Supreme Court of Nova Scotia has granted QuadrigaCX creditor protection, and appointed Canadian law firms Miller Thomson and Cox & Palmer to represent its customers in the upcoming proceedings.